The car and truck maker - which is currently deciding on the future of its troubled U.S. Chrysler unit and could sell the operation - said WestLB had informed it that it is holding the stake for purely financial reasons and the transactions are fully hedged with futures.

WestLB previously held below 3% of DaimlerChrysler's equity.

"The number of DaimlerChrysler shares held by WestLB is to be reduced again to well below 3% of the capital stock in the foreseeable future. The transactions therefore do not result in any shift in DaimlerChrysler's shareholder structure," the car maker said in a statement.

DaimlerChrysler spokesman Thomas Froehlich declined to comment further, but noted that in the past other banks had also held larger positions in DaimlerChrysler for trading purposes.

Banks like WestLB offer to buy, at an agreed price, large stakes in companies from institutional clients that want to avoid dropping large block trades on to the market, possibly causing a wider selloff in the shares. The stakes are then held by the banks and sold off in smaller chunks over time. The banks cut the risk of the deal by hedging against share price fluctuations.

Shares in DaimlerChrysler fell sharply following the announcement, but narrowed their loss during afternoon trading in Frankfurt. DaimlerChrysler shares closed down 1.2%, or EUR0.72, at EUR61.27, while the DAX bluechip index was down 0.1%.

The future share sales by WestLB "means that the supply of DaimlerChrysler shares will rise which will put pressure on the share price," explained one Frankfurt-based trader, who requested anonymity.

"Investment banks placed the DaimlerChrysler shares with WestLB probably because the share price had recently been driven by speculation on a favorable Chrysler spin-off," the trader said, adding that while the stock's upside is limited after recent gains, bad news on a Chrysler sale could send shares sharply lower.

A spokeswoman for Bafin, the German markets regulator, said that new transparency requirements could force banks like WestLB to make disclosures on some trades that in the past would have remained undisclosed.

Since January 20 this year German banks need to disclose how many shares they hold in trading accounts - accounts that hold shares for daily trading on the markets - in addition to the shares they choose to book on their own balance sheet. The European Union's transparency directive now forces banks to disclose shares held in trading accounts if they exceed 5% of the voting rights even if they are held for only a short time and even if they do not impact the banks own profit and loss account.

WestLB has recently come under fire for trades made in shares of rival German car maker Volkswagen AG (VLKAY). Earlier this month it filed a criminal complaint against two recently fired traders for alleged wrongdoing in relation to the bank's proprietary trading, or trading on its own books.

That followed media reports that it had lost EUR100 million within a very short time on a trading bet that the price differential between ordinary and preference shares in Volkswagen would narrow. Instead, the differential widened, after Porsche AG (POR3.XE) increased its stake in Volkswagen to 30.9%.

WestLB's 14% stake in DaimlerChrysler was placed with the bank by several institutional investors, and is held on the bank's own books until corresponding futures contracts will start expiring in April, a WestLB spokesman said.

The spokesman said the DaimlerChrysler stake wasn't a proprietary trading position, meaning the German bank wasn't trading these shares on its own books.

"Several institutional investors sold us these shares," the spokesman said, and the position already has been hedged through futures contracts."

He couldn't immediately specify the size of each individual contract, nor over how many futures contracts the 14% stake had been hedged.

"We will dispose of this stake in the foreseeable future," he confirmed.

"The stake is not being held on behalf of third parties. It is held by WestLB. We don't know who is going to buy the stake, and there are no plans to sell the stake to a specific investor," a second spokesman for WestLB said.

DaimlerChrysler said that WestLB's stake exceeded the threshold of 10% on April 4, the day when the German-U.S. automaker was holding its annual general meeting in Berlin.

On April 5, billionaire investor Kirk Kerkorian's Tracinda Corp., in a surprise move, said that it is prepared to offer $4.5 billion in cash to acquire Chrysler Group. DaimlerChrysler executive board member Ruediger Grube is scheduled to meet bidders for the company's troubled Chrysler division in New York this week. However, it appears that Tracinda isn't among the bidders being invited to meet executive board member Grube.

But analysts said heavy trading in DaimlerChrysler shares on April 4 could be explained by the fact that DaimlerChrysler paid out its dividend April 5. As profits on dividends are taxable in some countries, some investors choose to sell off the shares a day before the dividend is paid out, the analysts said.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.